Mauritania Individual Tax Guide

Worldwide Personal Tax and Immigration Guide 2021–22

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Mauritania ey.com/globaltaxguides

Please direct all inquiries regarding Mauritania to Alexis Moutome and Olga Akakpovi of the Dakar, Senegal, office.

Dakar, Senegal

GMT

EY 22, rue Ramez Bourgi B.P. 2085 Dakar Senegal Executive and immigration contacts Alexis Moutome Olga Akakpovi

+221 33-849-22-13, +221 78-442-33-41 Email: alexis.moutome1@sn.ey.com +221 33-849-22-13, +221 76-668-82-82 Email: olga.akakpovi@sn.ey.com

A. Income tax Who is liable. Residents of Mauritania are taxed on worldwide income. Nonresidents are taxed on their Mauritanian-source income only.

Mauritanian and foreign individuals are considered to be residents for tax purposes if they meet any of following criteria: • They maintain a home in Mauritania as owner or leaseholder.

• They have their vital interests in Mauritania.

• They have their primary residence in Mauritania.

• They perform a professional activity in Mauritania, unless such activity is accessory (not the principal source of income).

Foreign-source income is not taxable in Mauritania if the recipient can prove that such income has been taxed in the source country.

Income subject to tax. Resident individuals (natural persons) are

subject to several types of income tax depending on the nature of their income. The following are the various categories of taxable income: • Employment income • Pensions • Commercial and industrial income • Noncommercial income • Investment income • Rental income • Capital gains The taxation of the various categories of income is described below.

Employment income. Employment income is taxed at progressive rates (see Rates). Gross employment income includes public and private wages, salaries, perquisites, bonuses, fringe benefits and supplement salaries (payments made in addition to salary, such as rental subsidies and overtime pay).

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The following types of income are exempt from tax: • Compensation and allowances relating to governmental or local representative duties • A fixed amount of MRU6,000 • Up to MRU1,000 per month for all compensation and allowances except those relating to housing, transportation, liability and office (allowances relating to liability or office are allowances paid to employees with administrative or financial responsibilities, such as those who are on call or must remain late at the office) In addition, fringe benefits that do not exceed 20% of the salary received are exempt from tax. Otherwise, they are taxed up to 40% of their total amount. For this purpose, the salary received is taxable remuneration, excluding fringe benefits, including allowances and premiums having the nature of salary supplements.

Family allowances, family assistance allowances and all other allowances added to the base salary that are paid depending on the family situation are also exempt from tax.

Pensions. Public and private pensions as well as life annuities are taxable at progressive rates (see Rates) if any of the following circumstances exist: • The beneficiary is domiciled in Mauritania.

• The beneficiary is domiciled outside Mauritania, and the debtor is established in Mauritania.

The following types of pensions are exempt from tax: • Legal payments for war disability • Legal payments paid to war victims as well as their successors • Allowances for professional accidents (allowances for accidents caused by working tools or the handling of products in the workplace) • Combatant retirement benefits Commercial and industrial income and noncommercial income.

Individuals who usually perform a gainful activity for their own account are subject to a single personal income tax, “Impot sur les Bénéfices d’Affaires des Personnes Physiques” (IBAPP), covering commercial and industrial income as well as noncommercial income.

This personal income tax includes the following three tax schemes: • Two schemes based on the actual income that are similar (the normal regime and the intermediary regime) • A lump-sum tax scheme The normal tax regime applies to taxpayers who realize an annual turnover exceeding MRU5 million, and the intermediary regime applies to taxpayers realizing an annual turnover between MRU3 million and MRU5 million.

The lump-sum tax regime applies to taxpayers who realize annual turnover of less than MRU3 million.

For the tax regimes based on the actual income (normal and intermediary regimes), the tax due corresponds to 30% of the tax

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base or to 2.5% of the taxable revenues, whichever is higher.

However, the minimum tax payable depends on the type of tax regime (MRU125,000 for the normal tax regime and MRU75,000 for the intermediary tax regime).

The tax base corresponds to profits less expenses. However, taxpayers are not allowed to do the following: • Deduct or take into account exchange gains and losses • Deduct headquarter expenses • Deduct donations and subsidies • Deduct deemed deferred depreciation • Use accelerated or decreasing methods of depreciation • Deduct provisions It is possible for the individuals subject to the intermediary tax regime to opt for the normal tax regime before 1 February of each year. The option becomes effective from 1 January of the year of the opting for the normal tax regime and should be applied for at least two fiscal years.

However, an individual subject to the normal tax regime cannot opt for the intermediary tax regime or for the lump-sum tax regime.

Taxpayers subject to the lump-sum tax regime are liable to pay a tax of 3% of their annual turnover.

Under the lump-sum tax regime, for individuals who perform simultaneous activities in the same location or several activities in different locations, each business will be considered a different activity taxable on a separate basis, assuming that the total turnover is less than MRU3 million.

Investment income. Investment income, which includes dividends, directors’ fees and interest on bonds, debentures, and bank deposits, is subject to proportional tax at a rate of 10%.

Rental income. Rental income includes rentals of houses, office buildings, factories and real estate without buildings. Rental income is subject to proportional tax at a rate of 10%.

In addition, a tax is imposed on built property, which is borne by the owner. This tax is applied to the rental value at a rate ranging from 3% to 10%. However, in practice, an 8% rate is applied.

Capital gains. Capital gains realized in the performance of professional, commercial and agricultural activities are taxed as ordinary income, with certain relief available.

Taxation of employer-provided stock options. The tax law does not

provide specific rules applicable to the taxation of employerprovided stock options.

Rates. The following are the progressive tax rates for employ-

ment income and pensions.

Taxable income Exceeding Not exceeding MRU MRU

0 9,000 21,000

9,000 21,000 —

Rate %

15 25 40

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A nonresident individual is taxable on income derived from services performed in Mauritania.

Employers withhold tax from salaries monthly.

Relief for losses. Losses may not be deducted from income from other categories, but they may be carried forward for five years to offset income in the same category.

B. Inheritance and gift taxes The Mauritanian tax law does not contain an inheritance tax.

However, donations and inter vivos gifts are subject to registration fees. The rates of these fees vary according to the type of assets transferred. For example, donations and inter vivos gifts of real estate and goods are subject to a 2% registration fee.

C. Social security Social security contributions are withheld monthly by employers for nationals and expatriates and are payable to the National Social Security Fund. They are computed on the basis of gross remuneration paid that is capped at MRU7,000. The rate of social security contributions is 15% of gross wages for employers. This consists of a 2% contribution for medical contributions and a 13% contribution for social contributions. Employees are required to pay 1% of gross remuneration capped at MRU7,000 for social contributions. Such amount is withheld by the employer and paid to the relevant authorities.

Social security benefits relate to sickness, maternity, retirement, disability, invalidity, professional sickness and industrial sickness. The amount of benefits depends on the total amount of contributions made on behalf of the employee.

D. Tax filing and payment procedures Commercial and industrial income and noncommercial income.

Individuals subject to personal income tax based on actual revenues should file the annual tax return by 31 March of the year following the end of the fiscal year.

They should pay the tax due in in the following three installments: • 40% by 31 March • 30% by 30 June • The balance by 30 September Individuals subject to the lump-sum personal income tax regime will be required to declare and pay the tax due by 31 March of the year following the end of the fiscal year.

Employment income and social security contributions. Employers

must withhold individual income tax from wages and fringe benefits, if any, and pay the tax withheld to the tax authorities by the 15th day of the month following the month of the payment of the compensation.

Employers must make payments each quarter for both nationals and expatriates to the National Social Security Fund. For details regarding the calculation of the payments, see Section C.

M au r i ta n i a 997 Rental income tax. The rental income tax on rents received in the

preceding year is payable before 1 March of each year, and the tax return must be filed before the same date.

The tax on built property is due for the full year. In principle, the tax on built property must be paid by the owner after receipt of a tax notice.

However, tax must be withheld by the renter under a lease of premises at an 18% rate (corresponding to 10% of rental income tax and 8% of tax on built property) and paid by the 15th day of the month following the month of the payment of the rent if the renter is a legal entity or an individual subject to commercial and industrial income tax or noncommercial income tax and subject to an actual scheme tax on business profits (normal or intermediary regime).

E. Double tax relief and tax treaties Foreign taxes paid may be deducted as an expense from taxable income.

Mauritania has entered into double tax treaties with France, Senegal and states of the Arab Maghreb Union (Algeria, Libya, Morocco and Tunisia).

The treaties generally provide the following relief: • Commercial profits are taxable in the treaty country where a foreign firm performs its activities through a permanent establishment.

• Interest is taxable in the state of residence of the beneficiary, but the state of source may withhold tax at source if provided by its domestic law.

• Employment income is taxed in the treaty country where the activity is performed, except in the case of a short assignment.

The treaty between Mauritania and France provides that royalties and remuneration paid to a nonresident for services rendered in Mauritania are taxable in the state of residence of the beneficiary of the sums paid. However, the state of the revenue source has the right to levy tax according to its tax legislation if the beneficiary of the sums paid has a permanent establishment in the other country and if the royalties are linked to this permanent establishment.